The Consumerization of IT

In a recent presentation, Lew Cirne, CEO of application performance management vendor New Relic (it’s an anagram), revealed the company now has 5,000 customers and just one sales rep. That’s astonishing. Cirne points out that there’s a new class of customers for whom “there is no reason whatsoever for application performance management to be sold by a direct sales force.” If you’re building a cloud-based application on top of a standard Ruby, .Net (s msft) or Java (s orcl) stack, much of the complexity has been factored out already, enabling a much simpler self-service sales model.

This is a profound shift in IT. Cirne’s prior company, Wily Technology, had all the trappings of a typical enterprise software company: lots of knobs and dials, complex on-site installations, high prices and lengthy sales cycles. Still, for customers deploying J2EE app servers, Wily’s products helped them find and fix performance issues that otherwise would have taken months to resolve. Wily did a great job back in the day; but things have changed. By moving to a cloud-based platform as a service the deployment model can now be dramatically simplified. New Relic illustrates a powerful trend: the consumerization of IT.

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In the last 10 years, the web has brought us countless innovative technologies which enable consumers to get things done simply and without fuss, whether it’s finding information, buying goods and services, managing finances, sharing documents, communicating with friends, finding a job, setting up meetings, backing up a PC, or any number of other activities. So why, when you go to work in a typical large company, are the applications so bloated and complex? Why can’t we get the kind of simple, one-click deployment of applications and infrastructure that mirrors what’s going on in the consumer world?

Open source has gone a long way toward putting power back in the hands of developers, who can download, install and deploy software without having to go through any kind of convoluted sales or budget approval process. You want MySQL? You can download and install in 15 minutes, and you don’t have to talk to anyone to do it.

Software as a service (SaaS) takes this to an even broader audience, enabling employees to get the kind of lightweight, consumer, self-serve capabilities in their job without even having to run their own servers. Platforms like Amazon AWS (s amzn), Heroku, Makara, RightScale and others put this same kind of SaaS power in the hands of developers.

It’s a pretty compelling message. Why buy and manage complex infrastructure or applications when a simpler approach will get results faster and cheaper? Sure there are cases where you may want the capabilities of a public cloud running in a secure, private environment; Eucalyptus, which implements the Amazon AWS API, could fit the bill in such a case.

No doubt, much of the simplification in from SaaS comes from the fact that it does less. Salesforce.com (s crm) has never had the bells and whistles of Siebel, but it also doesn’t take a year to deploy. Users of Box.net are probably OK with giving up some of the functionality found in Sharepoint. But does anyone really need every last feature that’s gone into latest Enterprise software upgrade?

My view: ease of use trumps a long feature list any day of the week. There are both techological reasons as well as sociological and economic reasons for why organizations are seeking greater simplicity. Part of this stems from the fact that complex enterprise applications grew beyond the ability of most organizations to successfully adopt. The cost of implementing a heavy-weight, custom solution got in the way of ever achieving the benefits. I think many organizations that were oversold on enterprise software in the 90s have now realized that agility and ease of use may be better, even if it means adapting the business to more standardized, or even simplified, processes.

As it turns out, the web-based browser user interface, while constraining, actually has the benefit of keeping things simple. That’s exactly what’s needed to enable rapid adoption of technologies: Keep it simple, stupid. The rise of open source, as well as SaaS, has been part of a “back to basics” approach in software that has put usability of the most important capabilities over the breadth and complexity of having every feature imaginable. In other words, delivering the 80-percent-most-common features can lead to much greater adoption than trying to have every last bell & whistle.

After all, look at the success of Apple’s (s aapl) iPad. You can argue all you want about open vs. closed, or integrated fragmented. The bottom line is: Apple sold 4.2 million iPads last quarter by delivering a powerful but easy-to-use device. Now they’re bringing that same type of iPad interface to the Mac with the arrival of the Mac App Store in the coming months and the Lion OS in 2011. Apple, perhaps better than any other vendor, has captured the most common use cases with their products. They don’t try to get every feature into their products. They are rigorous in determining the essential feature set so the products remain easy to use. In fact, Apple has raised simplicity of design into an art form for consumer electronics. Because of Apple’s elegant designs we don’t even think of the iPad or iPhone as computers. Why shouldn’t IT get the same kind of ease of use as the iPad?

Perhaps these examples of ease of use will inspire other ideas that could be applied in IT. What do you think? What areas of IT do you think are ripe for consumerization? Let me know your thoughts by posting a comment below.

Zack Urlocker is an investor, advisor and board member to several startup software companies in SaaS and open source. He was previously the EVP of products at MySQL responsible for engineering and marketing. He is currently an executive in residence at Scale Venture Partners. You can read more of his observations at www.theopenforce.com.

Great post, and totally right on. Of all the apps to move to the cloud, CRM seems like a no-brainer in a lot of ways. Suzanne Dove, our VP of Sales Effectiveness at Qwest, blogged about Qwestâ€™s migration to Salesforce.com:

This may be unpopular given the recent trends that this (very good) article highlights and the 12-0 favorable/unfavorable ratio of the comments, but I’m going to play devil’s advocate.

I think there are situations where it makes sense to go to market with a good old-fashioned solution-selling sales team, large deal sizes and at least somewhat customized solutions. For example:

– if you sell a product that isn’t applicable to SMEs and thus has a smaller target group
– if you are creating a new category where the feature-set isn’t known yet
– if you are selling a solution that requires a great deal of customization for a particular company

Now, I’m not advocating a return to the crazy days of enterprise software in the ’90s, with year-long sales cycles followed by year-long (or longer) implementations with questionable ROI.

But I do think that in some cases it makes sense for companies to blend the best technical aspects of SaaS (faster deployments, less complication for internal IT departments) with the best revenue aspects of Enterprise (larger deal sizes, cash rich, higher touch).

Great article and you’re correct that the whole IT industry is moving toward more simplicity. Companies like Salesforce have grown because they have offered both all the important services a company needs in a simple to use format and a system stable enough to be counted on to be there. It’s these things that IT is finding are more important than those complicated Swiss Army Knife answers they have turned to in the past. I think like you we’ll only see more movement to simplicity, stability, and cost effectiveness in the future.

Great post and yes managing the sales process to find your sweet spot on how many staff you need for how many sign ups is right where we are at. Interesting to learn one of our vendors New Relic has 1 salesperson. I think our public are the small business owners and not the enterprise customer and due to that fact they really have not had to go through a buying process as it was just picking up QuickBooks down at costco. Now there are a ton of options for them on sites like http://www.getapp.com.

It is obvious that enterprise software is seeing a change on how it is developed, ran, bought and used. There are millions of small businesses or LOB users that are adopting business applications for the first time, CRM, collaboration, email marketing and accounting leading the pack from what we see at GetApp.com with thousands of buyers finding and evaluating web-based business apps. These new users are buying like consumers, they are behave as”prosumers”. They want a way to find and evaluate the product that suits their need and an easy way to buy, run and use it. Most of this is happening online and this is why we are seeing new app stores popping up where these pros will buy the way they do as users. The Mac App Store will be one for Apple apps but there are other successful vendor agnostic initiatives such as my company http://www.getapp.com/. One big challenge that has to be addressed is the integration of these SaaS applications with legacy apps and other web-based products. Moving forward there will be many tools and services to buy or build connectors. These are likely to be available on app stores together with applications.

Nice post. Thanks. One element that I think you have missed is the need of large corporations to have their processes codified in their software so that they cater to the lowest common denominator (ie they don’t want dumb-people in their organizations to make mistakes). The level of customization required for this is usually not possible for SaaS software companies because of resource limitations and technical issues (how do customizations for one customer effect the software experience for other customers?). Small and mid-size customers are willing to sacrifice customization for ease of use and implementation – larger companies may have different needs and concerns.

Interesting topic. Skytap provides similar functionality as RightScale and Amazon Web Services with a self-service UI for a fraction of the cost and time. Hundreds of customers use Skytap for the same situation and are have achieved significant time and cost savings. Check us out by signing up for a trial at http://bit.ly/9hDLHg.

Thanks for this great post. Completely agree with your view about ease of use, and the challenges facing Enterprise software. While packed with features, the experience has not got the same level of attention resulting in lack of use and adoption.

I’m in complete agreement that small increases in ease if use lead to large increases in adoption.
The challenge I see with many of the SaaS solutions available is that the world is not a marketplace filled with consumers endowed with perfect knowledge of all available technologies. Very many IT decision makers are ignorant of leading edge developments and their trusted advisors (System Integrators or IT Resellers) don’t have any incentive to move them towards SaaS unless in a walled garden or controlled environment. Sure developers can try and lead depts into SaaS but systems need credibility to mitigate the risk that decision makers might associate with with the lesser well known guys.

“My view: ease of use trumps a long feature list any day of the week.” Agree 100% and it actually leads to more, rather than less, functionality as a wider range of services can be enabled across a broader and more diverse group of people.

Enterprise IT is in desperate need of innovation and consumerization will be the primary driver. People’s expectations about how their computing experiences should feel are skyrocketing. It was one thing to have everyone working on a horribly designed ERP system when it was their primary computing experience. Today they know working on the old ERP system is painful because the system sucks and not because “they just don’t get computers.”

IT works for the business. The business is going to get what it wants one way or another.